Wednesday, April 8, 2009

Campari Buys Wild Turkey for $575 MM.

Back in December, we announced that Wild Turkey was on the block. Its parent, Pernod Ricard, desperately needed cash to lower the debt it assumed when it bought Absolut Vodka.

The buyer, announced today, is Davide Campari-Milano, better known as Gruppo Campari. The company's namesake product, essential for making the Negroni cocktail, is an alcoholic bitters that is very popular in its home country of Italy.

Gruppo Campari has, slowly but surely, been trying to penetrate the United States spirits market. To that end it acquired Skyy Vodka in 2002 and Cabo Wabo Tequila in 2007. When this deal closes at the end of June, nearly two-thirds of Campari's sales will come from outside of Italy.

Exploitation is good if it means investment and a commitment to the premium and super-premium segments, which are of particular interest to American whiskey enthusiasts. Kentucky Spirit, the top of the Wild Turkey line, is highly regarded, as have been most of the brand's limited edition releases.

We hope Campari has another $30 MM or so handy, so they can revive the stalled expansion at the distillery in Lawrenceburg, Kentucky. The plan has been to double production capacity and upgrade the visitors center, but it has been on hold for months.

From a sales standpoint, Wild Turkey is not as big as you might think. It sells less than 10 percent of what either Jack Daniel's or Jim Beam does, about 800,000 cases a year. It's more comparable to Maker's Mark in terms of both sales volume and profitability.

Campari says it is also excited about getting Wild Turkey American Honey Liqueur in the deal, which it believes has great growth potential.

Some are already complaining that another American icon has a foreign owner, but Pernod is French and it has owned Wild Turkey for 30 years.

The brand and distillery have only had the same owner since 1971. Before that, the distillery was owned by the Ripy family, which supplied New York grocer Austin Nichols with whiskey for its Wild Turkey brand. The brand was created in 1940, but both Austin Nichols (1855) and the Ripy family distillery (1869) have deep 19th century roots.